Spending on childcare has increased by 41 per cent over the past
decade, boosting support for working parents. But major gaps in
support mean that parents in education are missing out, with a
parent studying in Further Education (FE) in England receiving no
guaranteed support, according to new research published today
(Saturday) by the Resolution Foundation.
The report Hard Lessons notes that there is a welcome
new consensus over the need to invest more in childcare, with a
major increase announced at the end of the last Parliament and
confirmed in the recent Budget. As a result, childcare spending
in England this year (2024-25) is 41 per cent higher in real
terms than a decade ago (2014-15) – up from £5.1 billion to £7.2
billion a year (in 2023-24 prices).
However, major gaps in eligibility for childcare support –
notably for working-age parents in education – mean that many
young families are still missing out on this much-needed support.
The report explains that, as well as the 15 hours of free
childcare that goes to all 3-4-year-olds, a parent of a child
aged 3-4 working full-time on the National Living Wage would be
entitled to a further 15 hours of additional free childcare, as
well as some support from Universal Credit (UC) Childcare
assistance, which could reach a maximum value of £12,900.
A low-income parent who is studying in Higher Education (HE) is
instead entitled to a Childcare Grant (CG). This is broadly
comparable to UC childcare, subsidising childcare up to 85 per
cent of costs (up to a certain cap). However, they are not
eligible for the additional 15 hours of free childcare that
working parents enjoy. As a result, the maximum a parent in HE
could receive in support for childcare costs is £10,100 for a
child aged 3-4.
But gaps in support are most stark for parents studying in
Further Education (FE), says the Foundation.
A parent studying for a level 3 qualification or below has no
guaranteed entitlement to childcare support (unless they started
the course aged 19 or younger). The only recourse for working-age
students is to apply for Learner Support (LS), a fund which is
allocated at the discretion of cash-strapped FE colleges. But
more than one-in-ten colleges offered no support to students with
childcare costs in 2022/23, while fewer than one-in-three spent
more than 20 per cent of the funding they gave out on childcare
costs.
The lower childcare support for parents in education risks
creating a ‘parent penalty' that holds down parents' earnings
throughout their careers, as even a progression from vocational
level 2 to BTEC national diploma can boost wages by 32 per cent.
The report reveals that, among young adults (aged 19-24), parents
are 19 per cent less likely to be in employment, but 72 per cent
less likely to be in education, compared to those of the same age
who aren't parents.
However, the report says the Government should smooth over the
disjointed elements in our national childcare provision so that
it supports all parents who are studying, at an additional cost
of £240 million.
The Foundation recommends eliminating the inequalities between
different types of working-age student parents by extending the
Childcare Grant (currently only available to HE students) to all
full-time students regardless of the level at which they are
studying, at a cost of around £110 million in 2024/25. Parents
with 3-4-year-olds on full-time courses should also be treated
the same as working parents, and able to access 15 additional
hours of free childcare, at a cost of around £130 million in
2024/25.
While the recent policy consensus around the value of parental
employment has led to a welcome expansion of childcare support,
the Foundation notes that parental progression must also be a
crucial plank of the Government's upcoming Child Poverty Strategy
– given the high number of children living in poverty with
working parents in the UK today.
Lalitha Try, Economist at the Resolution Foundation,
said:
“A welcome new consensus has emerged on the need to invest in
childcare, with spending on childcare in England set to hit £7.2
billion this year. This should boost the incomes of working
parents – but major gaps mean that many studying parents continue
to miss out, leaving parents studying in Further Education with
no guaranteed support for childcare costs.
“Growing inequalities in childcare support mean while a working
parent can access up to £12,900 worth of help with childcare a
year, a parent who is studying at a Further Education level could
receive nothing.
“These policy gaps should be levelled out, at a cost of £240
million to the Treasury, to encourage more parents to continue
their education, and boost their skills and pay prospects. This
in turn would boost their chances of escaping poverty.”
